Does your company need an innovation lab?

Bi-modal IT may be tech buzzwords du jour, but creating a separate department (often in its own physical space) to do nothing but pure R&D is still an enticing prospect for embracing the innovator’s dilemma.

Innovation takes time – and money, and people and resources. That’s why it’s common for a company to focus on core business activities and not build an innovation lab – a specific building or department dedicated to working on prototypes and fleshing out ideas.

Part of the issue is that it can be difficult to justify and quantify the budget involved. Is it a skunkworks project that will consume resources but not deliver any value? Is it a purely a showcase for engineering prowess, or will the concepts produce real products? For many IT leaders, it’s hard to overcome the stigma of an innovation lab as a financial drain.

“Innovation labs are regularly knocked because they often don't have clearly defined links to specific business strategies or goals,” says Charles King, an analyst with PUND-IT. “But that's also the basis of their appeal. In essence, innovation labs create a ‘safe’ space where an organization can explore unconventional, even radical ideas in hopes of inspiring changes or new opportunities that could enhance its business.”

To find out the best reasons for having an innovation lab, CIO.com checked in with three large companies that have built or are in the process of building an innovation lab.

1. Lowe’s Innovation Labs

The well-known hardware chain runs an innovations lab (the plural on innovations is intentional) at their Mooresville, N.C. headquarters. It’s intended to show how retailing will work in the future.

One example: The lab designed and developed a 3D printer that will be used in the International Space Station. It created a robot, which operates in its San Jose Orchard Supply Hardware store, called OSHbot that greets customers (in English or Spanish) and performs product searches about 1,000 times every few weeks. A Holoroom is a virtual reality showcase that guides customers who are wearing VR goggles on how to do a home improvement project.

Kyle Nel, the executive director of Lowe’s Innovation Labs, says that every company needs to evaluate the problems facing a business now and in the future. That’s one of the reasons the company created the Holoroom. Not everyone understands how to install a new toilet or remove an old kitchen appliance, but VR can help educate new customers.

He says the company always seeks to understand the narrative for why the innovation is even needed and what it will produce. “If it already existed it wouldn’t be innovative,” he says. “If you aren’t facing challenges then you probably aren’t innovating enough.”

Another key piece of advice is to find the right mix of employees to run the lab. That can be challenging because the staff will need a blend of technical skills and yet be comfortable with ambiguity. They’ve had to work hard to find the right internal sponsors for the lab, and also to link the work they are doing with what will actually work in the store infrastructure.

“Having a group of folks focused on innovation can be far more effective but only if there is some kind of cross pollination otherwise you can have an independent group coming up with products that aren’t implemented and processes in search of problems,” says analyst Rob Enderle with Enderle Group. “There is a real art in balancing the group’s independence with keeping it connected to the business. Too much connection and you don’t get the innovation, too little and it becomes redundant.”

2. IBM Research - Austin

There’s no question IBM is one of the best examples of how to build and maintain an innovation lab. At its Austin, Texas facility, director Kevin Nowka can even take you a tour using a robot that lets you video conference with him and “walk” around the lab. Some of their key innovations include early pilots of sensor networks for the Internet of Things, research on processor cores and an innovative email tool that lets you revise a message before its read.

Nowka says it’s important for any business to decide how they will fund the innovation lab, that it might not always be a revenue producer but will extend the capabilities of the company. He says you also have to identify “the customer” of the lab, whether that is other businesses who will partner with you (as is the case with IBM) or an actual end-user.

“An innovation lab gives you the ability to test out and experience and experiment with new technologies and, more importantly, to find out how they will integrate with existing business processes or enhance them,” says Nowka, explaining that this “mad scientist” approach is critical because you never know what might come out of a lab when you take highly disparate products – such as sensors and wireless networks – in the same environment.

He says it’s also important to identify the roles in a lab. You will need technical folks, but also people who can establish and build relationships with outside partners and “plumber types” who can run cables and do some of the physical work involved. He says building an innovation lab is like creating a jigsaw puzzle, but it’s often hard to know which pieces you need.

They key, he says, is to understand the scope – is it intended as a proof-of-concept for upper management, is it more for partners and customers to experiment, or is it more about creating something brand new? PUND-IT’s King mentioned how quantify this is important because you have to know the outcome of the lab and what it will produce before ever building one.

“Research needs to stay in touch with production without having it interfere too much with real innovation, which often isn't pretty in its early stages,” says Roger Kay, an analyst with Endpoint Technologies Associates who covers IT trends. “The housing problem is a balance between having research and production mingle freely and randomly, which sounds like a good thing, and letting researchers pursue their projects independently. The messaging, subliminal or otherwise, coming from production can be pretty distracting.”

3. Autodesk Pier 9

This 35,000-square-foot creative workshop located in San Francisco is intended to blend the virtual software created at Autodesk with the physical world, says Greg Eden, the vice president of brand and communication. One of the projects involved creating a 3D printer called Ember as a way to show what is possible with 3D printing. They produced a model of the entire downtown San Francisco area (or 115 city blocks).

One of the most interesting differences with Autodesk’s Pier 9 is that it is not intended as a showcase for products. Eden says they already have “showrooms” at their corporate offices, so the 3D printer project was not intended as a way to see how their software works. He says it’s critical to the long-term success for any company within tech or outside of tech.

“We can all list off the companies that have created amazing products and then managed their slow decline with dot releases after dot releases, making small incremental steps,” he says. “These spaces unlock the creativity for us but also for customers and the wider community”

Interestingly, Eden says it is important for a company building an innovation lab to make sure they do not underestimate the value. Autodesk has been surprised by the interest in their facilities and are currently building new labs in Toronto and Boston.

Where you locate the lab is also key. Pier 9 is located close to Silicon Valley and downtown, and it’s easily accessible by light rail. Their Toronto lab will be close to the University of Toronto, and their Boston facility is in an emerging tech center (the new home of the GE headquarters).

This story, "Does your company need an innovation lab?" was originally published by
CIO.